The U.S. Securities and Exchange Commission (SEC) has announced that Cassava Sciences Inc. (SAVA), its founder and former CEO, Remi Barbier, and its former Senior Vice President of Neuroscience, Dr. Lindsay Burns, will collectively pay over $40 million to settle allegations regarding misleading statements made in September 2020 about the results of a Phase 2 clinical trial for the company’s proposed Alzheimer's disease treatment.
Cassava Sciences, in a separate disclosure, stated that it fully cooperated with the SEC's investigation and has since adopted several remedial actions. The company does not currently expect the Department of Justice’s Criminal Division to press additional charges or seek further resolutions.
On Thursday, SAVA ended the trading session at $31.87, reflecting an increase of $1.40 or 4.59%. However, in after-hours trading, the stock fell by $3.62 or 11.37%.
In a related order, the SEC has charged Dr. Hoau-Yan Wang, a consultant for Cassava and an associate medical professor at the City University of New York's Medical School, who also co-developed the therapeutic, for manipulating the clinical trial results.
The SEC order established that Wang was aware Cassava would present the manipulated data in their Phase 2 clinical trial results. This data was indeed publicized in a press release and investor presentation on September 14, 2020. The SEC's civil complaint further alleges that Cassava and Burns misled investors by claiming the Phase 2 trial was conducted under blinded conditions, despite Wang's unblinded status.
Without admitting or denying the allegations, Cassava, Barbier, and Burns have consented to civil injunctions to prevent future violations and have agreed to pay civil penalties amounting to $40 million, $175,000, and $85,000, respectively. Additionally, Barbier and Burns face officer-and-director bars for three and five years, respectively. These settlements are pending court approval.
Dr. Wang has also agreed to cease and desist from future violations and to pay a penalty of $50,000.
